Corporation Law of Panama - Law 32 of February …

1 Published by Corporation Law of Panama Law 32 of February 26, 1927 CHAPTER I INCORPORATION Article 1. Two or more persons of lawful age, of any nationality even though not domiciled in the Republic of Panama , may, in accordance with the formalities hereinafter provided, form a Corporation for any lawful purpose or purposes. Article 2. Such persons desiring to form such a Corporation shall sign articles of incorporation which shall set forth: 1. The names and domiciles of each of the subscribers of the articles; 2. The name of the proposed Corporation which shall not be the same as, nor so similar as to cause confusion with, the name of any other existing Corporation . The name shall include a word, phrase or abbreviation which indicates that it is a Corporation to distinguish it from a natural person or company of any other nature.

2 The name of the Corporation may be expressed in any language. 3. The general purpose or purposes of the Corporation ; 4. The amount of the capital stock and the number and par value of the shares of which it is to consist; and if the Corporation is to issue shares without par value, the statements required by Article 22 of this law. The capital stock and par value of shares of any Corporation may be expressed in terms of the legal currency of the Republic or of gold units of the legal currency of any other country, or of both; 5. If the shares are to be classified, the number of shares to be included in each class and the designations, preferences, privileges and voting powers or restrictions or qualifications of the shares of each class; or that such designations, preferences, privileges and voting powers or restrictions or qualifications shall be determined by resolution of the majority in interest of the Stockholders or of the majority of the Directors; 6.

3 The number of shares of stock which each subscriber of the articles of incorporation agrees to take; 7. The domicile of the Corporation and the name and domicile of its resident agent in the Republic, who may be a juridical person; 8. Its duration; Published by 9. The number, names and addresses of its Directors, not less than three; 10. Any other lawful provisions which the subscribers of the articles of incorporation may desire to include. Article 3. The articles of incorporation may be executed in any place, within or outside the Republic, and in any language. Article 4. The articles of incorporation shall be in the form of a public deed, or in any other form, provided that said articles be acknowledged before a Notary Public or before any other officer authorised to take acknowledgements at the place of the execution thereof.

4 Article 5. If the articles of incorporation are not in the form of a public deed, they must be protocolized in a Notary Office of the Republic. If the said document has been executed outside of the Republic, it must, before it is protocolized, be authenticated by a Panamanian Consul, or, if there should be no such Consul, by the Consul of a country friendly to Panama ; and if it should be in a foreign language it must be protocolized together with an authenticated translation subscribed by an official or public interpreter of the Republic. Article 6. The public deed or the protocolized document containing the articles of incorporation must be presented for registration in the Mercantile Registry. The incorporation of a Corporation shall have no effect with respect to third parties until the articles of incorporation have been recorded.

5 Article 7. Any Corporation formed under this law may from time to time amend its articles of incorporation in any respect; provided such articles of incorporation, when so amended, shall conform to the provisions of this law. Therefore, the Corporation may by such amendment change the number of its shares or of any class of its outstanding shares at the time of such amendment, change the par value of the outstanding shares of any class, change the outstanding shares of any class having par value into the same or different number of shares of the same or a different class without par value, or the outstanding shares of a class without par value into the same or different number of shares of the same or different class having par value.

6 Or increase the amount or the number of shares of its authorised capital stock or divide its authorised capital stock into classes or increase the number of classes of its authorised capital stock, or change their designations, rights, privileges, preferences, voting powers, restrictions or qualifications. But the capital stock of a Corporation shall not be reduced except in accordance with the provisions of articles 14 et seq of this law. Published by Article 8. The amendments shall be made by the persons hereinafter mentioned and in the manner provided in this law with respect to the execution of the articles of incorporation. Article 9. In case no share has been issued, the articles of amendment shall be signed by every subscriber of the articles of incorporation and by every subscriber to the stock of the Corporation .

7 Article 10. In case share has been issued, such articles of amendment shall be signed: (a) In person or by proxy by the holders of all the outstanding shares of the Corporation entitled to vote thereon and shall be accompanied by a certificate of the Secretary or an Assistant Secretary of the Corporation that the persons who have executed the articles of amendment, in person or by proxy, constitute the holders of all the outstanding shares of the Corporation entitled to vote thereon; or (b) By the President or a Vice-President and the Secretary or Assistant Secretary of the Corporation , who shall sign and annex thereto a certificate stating that they have been authorised to execute such articles of amendment by the votes, cast in person or by proxy, of the holders of a majority of such shares and that such votes were cast at a stockholders meeting held on the date specified in the notice or waiver of notice.

8 Article 11. In case that the articles of amendment alter the preferences of outstanding shares of any class or authorise the issuance of shares having preferences which are in any respect superior to those of the outstanding shares of any class, the certificate referred to in paragraph (b) of the preceding article shall state that the officers signing the same have been authorised to execute such articles of amendment by the vote cast in person or by proxy of the holders of a majority of the outstanding shares of each class entitled to vote thereon, cast at a stockholders' meeting held on a date specified upon notice or waiver of notice. Article 12. If the articles of incorporation provide that the votes of the holders of more than a majority of the outstanding shares of any class or classes shall be required in order to effect any amendment of any provision of the articles of incorporation, the certificate referred to in paragraph (b) of article 10 shall state that such amendment has been authorised in that manner.

9 Article 13. Unless the articles of incorporation or any amendment thereof otherwise provide, in the event of an increase of stock, each stockholder shall be entitled to a preferential right to subscribe for shares of stock, issued pursuant to such increase, in proportion to the number of shares then held by him. Article 14. Any Corporation may reduce its authorised capital stock by an amendment of its articles of incorporation; but no distribution of assets may be Published by made pursuant to any such reduction, which will reduce the actual value of its remaining assets to an amount less than the total amount of its debts and liabilities plus the amount as reduced of its issued capital stock. There shall be annexed to the articles of amendment a certificate issued under oath by the President or a Vice-President and of the Treasurer or an Assistant Treasurer stating that no distribution of assets made or to be made pursuant thereto will violate the provision contained in this article.

10 The judgement of the Directors as to the value of the assets and their determination of debts and liabilities shall be conclusive, except in the case of fraud. Article 15. Any Corporation , unless its articles of incorporation otherwise provide, may acquire shares of its own stock. If such acquisition is made out of funds or properties other than surplus or net profits, the shares of stock so acquired shall be cancelled by the reduction of the amount of issued stock: but such shares may be reissued if the authorised capital stock shall not have been reduced by such cancellation. Article 16. Shares of its own stock acquired by a Corporation with funds taken from surplus of its assets over its liabilities or from net earnings, may be held by such Corporation or sold by it from time to time for its corporate purposes and may be cancelled or reissued from time to time by the Board of Directors.